Shell upstream boss says UK sector still in “dark ages” on collaboration

Paul Goodfellow, Shell upstream director
Paul Goodfellow, Shell upstream director

The boss of Shell’s UK upstream business said the oil and gas industry was still in the “dark ages” when it came to collaboration.

Paul Goodfellow said companies working in the North Sea need to learn from other industries on how to work together.

The Shell boss looked to examples both in Scotland and the US of how collaboration could be driven across the sector.

Goodfellow, who took up his new role earlier this year,pointed to both Aberdeen City and Aberdeenshire Councils in Europe’s ‘oil capital’ and further a field to the shale industry in America .

He said the oil and gas industry should be “quite embarrassed” about how far it still had to go.

Goodfellow said the industry needs to get back to basics and deal with “quite mundane” but important issues that can cut through a lot of the inefficient practices that afflict the UK oil and gas sector.

He was speaking at a seminar in Aberdeen, Cultural Change – Learning from Other Sectors, organised by industry body Oil and Gas UK.

Earlier today oil major BP revealed its profits had dropped 40% in its third quarter, while Shell is also expected to detail the first nine months of the year later this week to investors.

Goodfellow said: “We should be quite embarrassed as an industry about how far in the dark ages we sit. When we talk about novel ideas such as ‘collaboration’, for other sectors, it’s just part and parcel of what they do.

“I do think this industry sector needs to really start from basics.

“When you look at City and Shire councils and see how far advanced they are in terms of collaborative processes, I think we should be quite embarrassed at times in terms of the distance we have to go.

“Having said that, it is a wonderful opportunity and a great catalyst for change, but it does need to have some structure with it.”

Goodfellow said the US onshore unconventional sector – where he previously worked for Shell – had a different approach to what was prevalent in the North Sea.

“The average dry hole cost has come between 2010-2015 down by 30-40%, in the North Sea well costs have gone up by about 50%.

“We really do have to take a look in the mirror and ask ourselves: are we willing to understand what drives that type of performance and how can we adopt and adapt it to the environment that we’re in?

“As cost has come down, unit productivity has gone up. That’s why certain elements of that sector are profitable and sustainable even at today’s prices.

“The driver of innovation and the driver of competing and collaborating at the same time is very, very different to what I’ve observed here.

“There’s a pride over there about knowing that you are the best, and by visibly sharing your performance information. There’s a hunger that if you know you’re not the best of going out and searching for learning what the difference is and making sure you fill those gaps. There’s a pride that if you are at the top of actually telling people how you’ve done it.

“We do need to look for insight about what has been done in the unconventional space. Clearly they have different footprint and volume of work, but there are things we can learn from that experience.

“It has to be a mindset in terms of spending money as if it was your own. We know that we can share and collaborate effectively in the safety space when there is a crisis that demands it. Look at what we did as an industry in response to helicopter evacuation.

“Yet can we get a standard, a common approach to permit to work, job safety analysis, to behavioural observation? It’s very, very difficult.”

He said the supply chain should challenge operators on how to adopt best practice, as it had experience of how things are done on many fronts.

“I think sometimes you are bit too polite to us in terms of simply accepting what the operator says, versus actually saying; ‘Hang on there’s a better way to do this because I’ve seen one your competitors or partners do it differently and way more cost effectively’.”

Goodfellow said Shell had put a strategic contracting team in place to work with the supply chain on how to collaborate and get common purpose whilst driving waste from the system and driving unit costs down.

The Shell boss said getting decisions made by the right people in an organisation was also crucial and enabled decisions to be taken.

He said:”A third of our fabric maintenance budget went on scaffolding, one of the most basic tasks that we do. When I asked how much we spend on it, no-one really knew. When you added it up, well over a third was spent on scaffolding. It may be low tech, but it’s critical to what we do.

“One very enterprising supplier came forward and said we’ve got a great piece of quick erecting scaffolding, but we don’t understand why you haven’t been picking it up.

“The reason was because they were trying to work at various front-line levels of the organisation and it wasn’t important to one individual, because they didn’t know the totality of what we were spending on that service.

“When they came in through the strategic contracting team and demonstrated to the facility managers and made the decision there and then and we’re in the process of deploying it across every facility and rig we have in the UK sector.

“Starting at a very mundane level can pay dividends very, very quickly get people on this journey of change. We have to be more transparent with each other. Cultural changes take a long, long time.”

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